Industry News

Cutting the cost of keeping warm to tackle fuel poverty

Future governments will be required by law to help fight fuel poverty by making the coldest, leakiest homes in England more energy efficient. Tackling this problem is a priority for government.

Since 2010 the number of households in fuel poverty has fallen every year, thanks to government energy efficiency schemes and the Warm Home Discount. However, the problem could rise again unless action is taken to tackle it.

The term fuel poverty describes households on low incomes with high energy costs, often caused by poorly insulated homes. Under the proposals published today, there will be a legal obligation for as many fuel poor homes as reasonably practicable to be raised to a Band C energy efficiency rating by 2030.

Currently only 5% of England’s 2.3 million fuel poor homes reach the Band C standard. Raising standards will cut bills significantly. Today, a typical Band C home faces energy bills that can be more than £1,000 lower than a Band F or G rated home. A typical Band D home faces energy bills that can be around £900 lower.

The proposals include improving as many fuel poor homes as reasonably practicable to Band E by 2020 and Band D by 2025, pushing up standards consistently over time.

Alongside this, the consultation Cutting the Cost of Keeping Warm puts a particular emphasis on helping low-income households who are not connected to the gas grid and those whose health can suffer from living in the cold. Local communities will be able to seek support for local energy action, including tackling fuel poverty, through a Community Energy one stop shop.

The government will also encourage and learn from local ‘insulation on prescription’ trials for those suffering health problems caused by living in cold, draughty homes which cost too much to heat. These have seen patients receive home improvements worth as much as £5,000 each.

One in ten privately rented homes have the lowest energy efficiency rating, with nearly 20% of these homes being in fuel poverty – almost double the national average. The government has published proposals to give domestic tenants the right to request their landlords carry out energy efficiency improvements from 2016.

From 2018, the least energy efficient rental properties would not be allowed to be let until they are improved to an Energy Performance Certificate rating of Band E. Any energy efficiency improvements must be financeable without any compulsory upfront cost to the landlord.

Unveiling the new proposals, Energy and Climate Change Secretary Ed Davey said:
“These proposals mark a radical shift away from old policies of tinkering at the edges without tackling the root causes of fuel poverty – homes that need too much energy and leak too much heat to be able to keep warm.

“We’ll target the worst properties first, where people in the most extreme cases face paying over £1,500 more than they need to. We’ll work with partners – including GPs and others working in in healthcare – to make sure the right help gets to those who need it the most.

“And today I’m reaffirming our commitment to the most vulnerable households by confirming that the current levels of help they are getting through the Energy Company Obligation will be maintained, and will continue for an extra two years – helping over half a million more low income households.”

Commenting on the fuel poverty proposals, the Chairman of the independent Fuel Poverty Advisory Group, Derek Lickorish MBE, said:
“The government’s announcement of a new 2030 fuel poverty target has been eagerly anticipated and I welcome the details being announced today. I am cautiously optimistic that the new law will drive significant improvements to the living conditions of the fuel poor across England. As we move towards a Band C, and as insulation and heating technology improves and becomes cheaper, there will be no let up by FPAG in striving to reach this target by an earlier date.

“For many fuel poor households, action is needed now – so it’s right to have specific ambitions for the nearer-term too, starting with those in the deepest fuel poverty. The new target should galvanise much-needed activity across the country so that we can make a real difference to people’s lives by reducing anxiety and ill health.

“The ‘devil will be in the detail’ and I look forward to working with government as it prepares its future fuel poverty strategy.”

Energy and Climate Change Minister, Amber Rudd said:
“Many people are currently living in unacceptably cold, inefficient properties and pay over the odds to heat them.

“Today’s proposals set out a clear plan of action to help the most vulnerable in our society enjoy the benefits of warmer homes with lower bills.”

Since 2010, the number of households in fuel poverty has fallen every year through government action. Nearly 400,000 vulnerable households have already been helped through ECO and the Green Deal, while last winter the Warm Home Discount reduced the bills of more than 2 million low income households, including over 1 million pensioners, by £135.

Mr Davey said that the proposed changes to the private rented sector would mean people living and working in privately rented accommodation would enjoy the benefits of warmer homes and offices – with lower bills.

To ensure the cost on landlords is not disproportionate, they can let properties below an E rating after 2018 if they have made use of all available funding or subsidy to make all reasonable improvements, and are still unable to increase the energy efficiency of the property to the minimum standard.

The government confirmed changes to ECO, which requires large energy companies to install energy efficiency measures such as loft insulation and boilers in people’s homes.

Proposed changes were first announced last December to reduce costs for suppliers and the impact on consumer bills. The government is now confirming that:

The level of ECO activity directed at low income and vulnerable households will be maintained – worth around £520 million per year, supporting 260,000 households on average every year

The carbon-saving elements of the scheme will change, taking an average of £30-£35 off household energy bills this year, making up part of the £50 off bills announced last December

The scheme will be extended for a new period so that it will expire in 2017, rather than 2015.

The renewed, extended version of ECO will result in more carbon emissions being saved over the life of the scheme, in addition to the extra £120 million support being given to improve people’s homes this year alone through the Green Deal Home Improvement Fund. The changes will mean an extra 600,000 homes will be made warmer by 2017. Since ECO started on 1 January 2013, more than 700,000 homes have been made warmer.